ST. PAUL – Minnesota's soaring home foreclosure rate, a top issue a year ago, has eased a bit in the Twin Cities, but not so much in other parts of the state.

And as the foreclosure situation swells, especially in rural Minnesota, options are scarce.

Ed Nelson of the Minnesota Home Ownership Center said that those outside the Twin Cities are more likely to find fewer options to get out of foreclosure because, ironically, they often did everything right when picking their mortgages.

The housing crisis began with sub-prime mortgages that were issued without enough collateral. Other problems with what Nelson calls exotic mortgages include payments that ballooned beyond the reach of the home buyers.

Home buyers with exotic mortgages were the first hit by the foreclosure crisis, which affected 26,265 Minnesota families last year and another 5,157 in the first three months of 2009. Many, but by no means all, of those with exotic mortgages are Twin Cities residents.

Now, however, the international recession is taking its toll on many outside the state's largest metropolitan area, even those who had safe, traditional mortgages. Those home buyers are in trouble because more and more are losing their jobs.

"They may be prime borrowers with good, affordable mortgages, but whose income is causing them to fall behind." Nelson said.

When those good loans become a problem to pay, foreclosure counselors can find fewer options for those borrowers than they can for those who took out exotic mortgages. Nelson said it is easier to work with lenders to find a way to keep mortgages active when the buyer continues to have a steady income.

The new wave of foreclosures is hitting those who lose their jobs.

The Home Ownership Center offers a gateway to people who are – or may – face foreclosure. The center puts home buyers in touch with counselors from non-profit agencies – often Lutheran Social Services in rural Minnesota – that provide free help.

While the center connects home buyers with free help, for-profit counselors often charge $3,000 to $11,000 for people looking to avoid foreclosure.

Minnesota Attorney General Lori Swanson has taken a dozen of those for-profit foreclosure counseling companies to court, claiming they improperly demanded money before providing any service.

The 2009 Legislature tightened state law in an attempt to ban up-front payments to companies that promise to help negotiate or modify terms of a home mortgage.

The bill was the only one of three major mortgage-related measures to get signed into law this year.

“In these difficult economic times, we must protect homeowners from scam artists who seek to take advantage of a bad situation,” Sen. Lisa Fobbe, DFL-Zimmerman, said.

One of two mortgage bills that Gov. Tim Pawlenty vetoed would have required lenders to offer mediation to home buyers before they could foreclose on a house. Pawlenty gave several reasons to veto the bill, although he said he supports mediation as an option.

The man who wrote a 2004 bill protecting Minnesotans from unscrupulous foreclosure counselors said the state bills are good, but they take a back seat to federal legislation.

"The ground has shifted to the federal level and the Obama mortgage assistance plan," said Professor Prentiss Cox of the University of Minnesota Law School.

Still, Cox said, the Obama administration continues to work on its mortgage plan with Congress and states need to wait to see what is left for them to do once a federal measure passes.

Swanson's office does some work with homeowners, but much of that is reserved for non-profit groups that work with the Home Ownership Center.

"Consumers can be misled by the for-profit entities," Nelson said.

Those in business and the non-profits use the same terms, and to a home buyer sound much the same, Nelson added.

Counselors working with the center look at each home buyer's situation and "match homeowners to the help that is available," Nelson said. At times, that includes financial help from state or private organizations.

Non-profit groups never charge for counseling, Nelson said.

Three counties report a greater than 700 percent increase in requests for the center's counselors from 2007 to 2008 – Washington in the eastern Twin Cities area and Stevens and Wilkin in west-central Minnesota. Just a handful of counties statewide reported fewer counselor requests last year.

For more information or to contact a foreclosure counselor, call The Minnesota Home Ownership Center at (866) 462-6466 or go to www.hocmn.org